WORLD TRADE  
ORGANIZATION  G/SCM/N/192/KNA 
8 July 2009 
 (09-3352) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Continuation of Extension under SCM Artic le 27.4 of the Transition Period for  
the Elimination of Export Subsidies Pursuant to the Procedures Contained  
in the General Council Decision in Document WT/L/691  
 
SAINT KITTS AND NEVIS 
  
 The following notification, dated 29 June 2009, is being circulated at the request of the 
Delegation of Saint Kitts and Nevis.    
_______________ 
 
 
1. Title of the programme for which extension is requested pursuant to procedures in G/SCM/39
 
  The Fiscal Incentives Act No. 17 of 1974.  This is  an Act to provide incentives to industry.   
 
2. Period covered by the notification
 
 
 The programme description is as of 30 June 2009, and is identical to that as of 1 September 2001.    3. Policy Objective and/or purpose of the subsidy
 
 
 The objective of this programme is to s timulate export performance, support investment, 
promote economic activity, and promote diversificati on in traditional and non- traditional products.   
 4. Background and authority for the subsidy
 
  Background  
 The Government of St. Kitts and Nevis consid ers that appropriate conditions for encouraging 
foreign direct investment are to be promoted in  order to ensure the economy remains in a viable 
position.   
 
 Authority 
 
 Fiscal Incentives Act (St. Kitts-Nevis-Anguilla), No. 17 of 1974.   
 5. Form of the Subsidy
 
 
 The subsidy takes the form of a tax exemption.   G/SCM/N/192/KNA 
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  6. To whom and how the subsidy is provided (w hether to producers, exporters or others), 
through what mechanisms, (whether it is a fixe d sum or fluctuating amount per unit), and if 
the latter, how is it determined?  
  The main beneficiaries of the fiscal incen tives scheme are manufacturing and agro-processing 
enterprises.  The incentive scheme is managed by the Ministry of Industry and Commerce.  
Applications for incentive benefits are submitted to the aforementioned Ministry, which recommends 
to Cabinet the level a nd type of concessions to be granted.   
  The Fiscal Incentives Act allows for the granting of  a tax holiday of up to fifteen (15) years, 
for the manufacture of approved products by approved enterprises.  The duration of these concessions 
is in accordance with the local value added genera ted.  In this respect, the Act classifies these 
approved enterprises as follows:    
i. Group I  enterprises, where the local value added is 50 per cent or more of sales, may enjoy a 
tax holiday of up to 15 years; 
 
ii. Group II  enterprises, where the local value added is between 25 per cent and 49 per cent of 
sales, may enjoy a tax holiday of up to 12 years;   
 
iii. Group III enterprises, where the local value added is between 10 per cent and 24 of sales, may 
enjoy a tax holiday of up to 10 years;   
 
iv. Enclave enterprises , where production is exclusively for export, may enjoy a tax holiday of 
up to 15 years.   
 
 Where an approved enterprise is engaged in a highly capital intensive industry it may receive 
some benefit for a period of up to 15 years.     The Act also grants import duty exemptions for machinery, equipment and spare parts, 
building materials, raw materials and others, as appr opriate to be used in eligible enterprises.   
 
 The Fiscal Incentives Act No. 17 of 1974 further provides for income tax relief under certain 
circumstances once the tax holid ay period has expired.  The relief is contingent on export 
performance.  It is granted on the export profits  of an enterprise accruing from the export of its 
approved product(s).  Relief is provided for non-traditional exports to all countries; however, in the 
case of exports to Guyana, Jamaica and Trinidad and Tobago, the period of relief is of only five 
(5) years immediately following the expiration of the tax holiday period. 
  (Schedule II part two of the Act attached  explains the method of calculating export 
allowance.)  7. Subsidy per unit, or in cases where this is  not possible, the total amount or the annual 
budgeted amount for this subsidy (indicating, if possible, the average subsidy per unit in the 
previous year).  Where provision per unit subsid y information (for the year covered by the 
notification, for the previous year or both) is not possible a full explanation should be 
provided  
 
 Given the nature and coverage of the programme there are no statistics available which reflect 
the amount of the subsidy per unit.  Further, ther e is no provision in our annual budget to determine 
the amount of funds allocated to this form of be nefit provided for approved enterprises because the 
approved assistance is revenue foregone.     G/SCM/N/192/KNA 
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  8. Duration of the subsidy  
  The duration of the subsidy is subject to St. Kitts and Nevis' rights and obligations under the 
WTO Agreements and in particular, the Decision by the General Council of 27 July 2007, which 
stipulates that all incompatible elements of the sch eme are to be eliminated by 31 December 2015.   
 
9. Statistics on the impact of the programme
. 
  The following table illustrates the total value of  St. Kitts and Nevis' foreign trade with world 
partners on all commodities during the period 2000-2008.   
 
Value (EC$ millions) of St. Kitts-Nevis' Foreign Trade with World Partners 
for the period 2000-2008 
 
Year Imports Exports Re-Exports 
2000 529.1 78.8 9.7 
2001 510.5 77.5 6.3 
2002 544.6 94.8 10.6 
2003 538.9 101.8 9.5 
2004 493.4 101.1 8.2 
2005 568.3 81.0 12.5 
2006 673.7 95.7 11.7 
2007 737.2 85.5 7.3 
2008 877.0 116.1 23.6 
 
10. Transparency Provisions in accordance with  General Council Decision of 27 July 2007  
  St. Kitts and Nevis has taken preliminary action in accordance with the General Council's 
Decision of 27 July 2009, as stipulated in WT/L/691.    
 Beneficiaries of the programme have been notif ied of its elimination by the end of 2015.  
Such beneficiaries were notified individually a nd via the Chamber of Industry and Commerce.   
  A national consultation with stakeholders from government and the private sector will be 
convened in the last quarter of 2009 to further discuss the matter and consider approaches to phasing 
out the elements of the programme that are incompatible with world trade rules.   
  St. Kitts and Nevis prefers a sub-regional appr oach to implementing its obligations in this 
regard.  Hence, the results from the national cons ultation will feed into an OECS strategy for 
elimination of the subsidy.    
 In July 2008, as a follow up to the findings of the 2007 TPR, the OECS MS with assistance 
from the Commonwealth Secretariat undertook to outline a plan of action for implementing the 
decision in the extension of Article 27.4 programmes.     In 2008 - 2009, with the assistance of The Tr adeCom Facility, the OECS contracted the 
services of a trade attorney and legislative drafter to assist MS with the implementation of WTO, 
CSME and EPA commitments.  This included the review of legislation pertaining to fiscal incentive programmes including those notified to the WTO.    G/SCM/N/192/KNA 
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   As of June 2009, the consultant prepared m odel legislation and drafti ng guidelines that have 
been shared with drafters and trade officials for their comment.  The proposed legislation is intended 
to streamline the administration of incentive progr ammes, provide equal treatment of local and 
foreign investors, increase transparency and establish a monitoring mechanism for assessing the 
application and effectiveness of incentive schemes.   
 
 Further technical assistance, particularly from the WTO Secretariat could assist St. Kitts and 
Nevis in implementing its obligations in accordan ce with the above referenced Decision by the 
General Council.    
 
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  G/SCM/N/192/KNA 
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  ATTACHMENT I  
  
SCHEDULE 1
 
 
MEMBER STATES  
  ( a )  A n t i g u a       J a m a i c a   Barbados     Montserrat 
 Belize      St. Kitts/Nevis/Anguilla 
 Dominica     St. Lucia 
Grenada     St. Vincent  Guyana      Trinidad & Tobago 
 
(b) any other State of the Caribbean region that  becomes a member of the Common Market. 
  
SCHEDULE II
 
 
PART I  
 
 
EXPORTS TO THE FOLLOWING TERRITORIES ARE  
NOT ELIGIBLE FOR EXPORT ALLOWANCE  
 
( c )  A n t i g u a       J a m a i c a  
Barbados     Montserrat B e l i z e       S t .  L u c i a  Dominica     St. Vincent 
  
PART 2
 
 
METHOD OF CALCULATING EXPORT ALLOWANCE  
 1. An export allowance set off for the purposes of section 16 shall be calculated as follows: 
 
Export profits as a percentage
     Rebate of income tax as a  
of total profits                                                                      percentage of income tax on  
  export profits  
 10 but under 21 25% 
21 but under 41 35% 
41 but under 61 45% 61 and over 50%  2. for the purposes of calculation – 
 
(a) export profits as a percentage of total profits " shall be deemed to be export sales as a 
percentage of total sales".   
 G/SCM/N/192/KNA 
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  (b) profits attributable to exports shall be taken to be the amount resulting from the 
formula p x e
  where:   
                                           s 
 
(i) "p" represents the chargeable profit of a company for its year of income;   
 
(ii) "e" represents the proceeds of sales (ex-f actory) of the output of a company 
exported during its year of income;   
 
(iii) "s" represents the proceeds of sales (ex -factory) of the total output of the 
company during its year of income.   
 3. In computing the proceeds of all sales for th e year of income there shall be deducted any 
excise duty paid on the goods sold during that year.    
 
SCHEDULE III
 
 
TAX HOLIDAY PERIODS  
  
Classification of
 
Approved Enterprise   Tax Holiday Period  
         Group             Years  
 
Group I Enterprise   15 
Group II Enterprise   12 
Group I Enterprise   10 Enclave Enterprise                       15 
   
 W.F. Glasford 
 Speaker 
 
 Passed in the House of Assembly this 17
th day of April, 1974.   
 
 
 E. JAMES FLEMING 
 Ag. Clerk of the House of Assembly. 
 
  
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